September 28, 2008

“We get to keep virtually all of that money”

Don't know if you follow Ben Worthen's usually insightful blog on WSJ.com...as you might expect from following this blog, I don't agree with him or the mostly evolutionarily-challenged posters that inexplicably agree with his premise that Cloud is just a lot of fog. If you want a dose of classic FUD (fear uncertaintly and doubt) re where software is headed, check this out

And for a good view of why Larry feels this way, all you have to do is add up all of those zeros behind the 20%+ yearly maintenance fees that continue to prop-up software and application companies. Here is Larry's own Co-President: “We get to keep virtually all of that money,” said Oracle Co-President
Safra Catz. Sure, some of that goes to customer service, but Catz said
that mostly customers are paying for access to the new software – and
Oracle is going to develop that new software regardless of whether
customers pay them maintenance fees. For Oracle, maintenance is pretty
much free money, about $10.5 billion worth in its 2008 fiscal and about
$1.5 billion more than that this year. “When many customers just send
you money for something you’re doing anyway, you literally can’t help
[but increase profits],” said Catz.

You can't make this stuff up... if there was any doubt about what these companies are poo-pooing Cloud it is for this reason.